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George A. Saitta,
CPA, CFF, FCPA, Partner


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Representative Cases - Healthcare Fraud & Abuse
United States of America, ex rel. Mark S. Razin et. al. v. HealthSouth Corporation
Cost Report Fraud
$325 million Settlement

This case settled in December 2004 when HealthSouth Corporation agreed to pay the United States $325 million to settle allegations that the company defrauded Medicare and other federal healthcare programs. HealthSouth Corporation is the nation's largest provider of rehabilitative medical services. A portion of the allegations were made by Mark S. Razin of Long Beach, California, formerly an employee of Healthcare Financial Advisors (HFA), a financial consultant to hospitals across the country. HFA was the subject of a February 1999 search warrant executed by the Office of the Inspector General of the Department of Health and Human Services.

The settlement resolves the hospital's liability for allegedly submitting cost reports to Medicare and other federal health insurance programs that sought reimbursement for costs that HealthSouth Corporation knew were unallowable. The allegations include submitting improper claims for individual inpatient discharges (false claims for Medicare outlier payments - intended to pay only for extraordinarily costly patients) and a range of unallowable costs (entertainment, travel, and public information and tax penalty expenses) on its hospital cost reports and home office cost statements ($89 million to resolve) and seeking reimbursement for unallowable costs on HealthSouth Bakersfield Rehabilitation Hospital's 1991 and 1992 cost reports ($736,410 to resolve).

As part of the agreement, HealthSouth entered into a Corporate Integrity Agreement (CIA) with the United States Department of Health and Human Services, Office of the Inspector General, requiring them to engage in significant compliance efforts over the next five years.

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